The Trump Rally, Market Timing and Picks

The post-election surge in stocks underscores the risk inherent in trying to time the market. In a recent article for TheStreet, Validea CEO John Reese discusses how investors, by “falling victim to elections, emotions or headlines” can miss out on returns. The goal, he argues, should be to invest in fundamentally sound businesses and avoid “jumping in and out of the market due to knee-jerk, emotional reactions.”

Using his guru-based stock screening models, Reese identifies the following five picks:

  • Fujifilm Holdings (FUJIY) develops, produces, sells and services document, imaging and information solutions. The company’s robust top line and strong liquidity are pluses, and the stock reflects an attractive price-earnings ratio.
  • G-III Apparel (GIII) designs, manufactures and markets a range of apparel products through large department stores. The company’s strong current ratio and debt-free balance sheet show well, as do the ratios of price-to-earnings and inventory-to-sales.
  • Robert Half International (RHI) provides specialized risk consulting and staffing services. The ratio of price-earnings-to-growth in earnings-per-share (PEG ratio—a Peter Lynch earmark that gauges fairness of price) is favorable, as is the nearly debt-free balance sheet. The stock’s earnings yield adds interest.
  • Thor Industries (THO) is a manufacturer of recreational vehicles that scores highly based on a strong PEG ratio, persistence in earnings-per-share and attractive price-sales ratio.
  • Tyson Foods (TSN) is a food company that markets private label brands as well as others including Hillshire Farms, Jimmy Dean and Sara Lee. This stocks earnings yield and return-on-total capital are both attractive, as are the PEG and price-to-sales ratios.

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